The Treasury Laws Amendment (2018 Measure No. 3) Act 2018 (Cth) (Penalties Act) commenced on 1 September 2018, introducing significant increases to the maximum penalties for breaches of the Australian Consumer Law (ACL).

Increased Penalties

The maximum penalty for acts, omissions or offences that occur on or after 1 September 2018, is:

  • for corporations, to the greater of:
    • $10 million;
    • 3 times the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the commission of the offence, if the court can determine this; or
    • 10% of the annual turnover of the body corporate during the 12-month period ending at the end of the month in which the body corporate committed, or began committing, the offence, if the court cannot determine the value of (a)(ii); and
  • for individuals: $500,000.

Application of Penalties

The new, higher penalty regime applies to a number of the ACL contraventions, including:

Civil penalty only

  • unconscionable conduct.

Civil and Criminal penalties

  • Types of misleading representation and misleading conduct, which includes:
    • false or misleading representations about goods or services;
    • misleading representations about certain business activities;
    • offering, with the intention of not providing, rebates, gifts, prizes;
  • Safety of consumer goods and product related services including:
    • supplying consumer goods or product related services that do not comply with safety standards;
    • supplying consumers goods or product related services covered by a ban;
    • non-compliance with a recall notice;
  • Supplying goods or services that do not comply with information standards.

These large increases, particularly for corporations, reflect Consumer Affairs Australia and New Zealand (CAANZ) finding that the former maximum penalty was insufficient to deter breaches. CAANZ found that for some corporations, a breach of the ACL could result in profits well exceeding previous penalties thereby "justifying" the non-compliant conduct from a commercial and risk assessment. As a result, Parliament, in line with CAANZ's recommendations, has aligned the ACL penalty regime with the competition penalty regime in the Competition and Consumer Act 2010 (Cth) which allows not only considerably higher penalties, but also for the Court to take into account the benefit gained from the breach, or the size of the perpetrator's business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.